TINFOILHAT: BHO44 targets IRS/401Ks


Updated April 12, 2013, 12:13 p.m. ET

Now He’s After Your 401(k)
The White House pulls a switcheroo on retirement savings accounts.

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Thus do our political betters now feel free to define for everyone what is “needed” for a “reasonable” retirement. Not to be impertinent, but does this White House definition include being able to afford summers at age 70 at Martha’s Vineyard near the Obamas?

The feds may think $3 million is all you need after a lifetime of work, but that’s roughly the value of a California police sergeant’s pension if she works for 30 years, retires at age 50 and lives to normal life expectancy.

Out in the private economy, people generally have to work longer than that before they retire, and some of them do manage to save significant amounts. We’re talking about people who work for decades and abstain from buying the bigger house or the new car so they can contribute the maximum to their 401(k)s or IRAs. The people who defer gratification and build a nest egg to avoid becoming a burden on their kids or their fellow taxpayers. The people whose savings finance productive enterprise. You know, the bad guys.

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The Administration’s political motive here is two-fold: First, it’s a redistributionist play and a revenue grab. But for many on the left it’s also about reducing the ability of individuals to make themselves independent of the state. They have always disliked IRAs, just as they oppose health-savings accounts, because over time they make Americans less dependent on federal entitlements or transfer payments. 

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Yeah, I know you all think I have a tin foil hat! So what.

Now the Wall Street Journal is in the same genre?

My concern is this is the first step towards exchanging your IRA/401K for an “enhanced social security benefit”.

I read somewhere that there is 14T$ in such plans. Held and controlled by ~2100 “custodians”. And the Gooferment needs about 13T$ to get back on an even keel.

Remember what happened in Cyprus?

Yeah, and I have a tin foil hat.


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MONEY: Tax deferred maybe a trap!


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That’s the message in President Obama’s budget for fiscal 2014, which for the first time proposes to cap the amount Americans can save in these tax-sheltered investment vehicles. The White House explanation is that some people have accumulated “substantially more than is needed to fund reasonable levels of retirement saving.” So Mr. Obama proposes to “limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013.” 

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When the big IRA / 401k accounts are thought about logically, are they not converting “capital gains” into “ordinary income”?

Would they be better off making investments in taxable accounts?

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MONEY: Roth IRA Conversions are problematic?


February 13, 2012
Roth may become more compelling planning option

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If the current proposal before congress to eliminate the stretch IRA provisions from the tax code go into effect, it presents an even more compelling reason to convert traditional IRA’s into Roth IRA’s.  While most people are reluctant to pay taxes now on a tax deferred account, the ability to pay taxes now under current rates, rather than under future rates which are likely to be higher.  Now with the potential loss of the ability of beneficiaries to stretch withdrawals when they inherit, thereby paying the taxes on the account within 5 years of their inheritance, the case for the Roth becomes more compelling.

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Their growth and distributions would be tax free – unless, of course, congress eliminated the tax free character of the Roth IRA.  But they would never break a promise like that (unless, of course, you count their original promise not to tax social security benefits).

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Wow, even more cynical people.

Converting to Roth now ENSURES that a tax is to be paid. Waiting MAY cause a higher tax to be paid.

What’s the time value of money in a zero interest rate environment?

That argues BOTH ways.

* Since money today has ZERO value, why not pay the tax (i.e., there is no better use of the funds; the NPV of the tax loss in the future is huge; confiscation of IRA / 401Ks for the “enhanced socsec benefit)?

* Since money today has zero value, why not try to convert it into something that will become valuable (i.e., real estate; gold; dividend paying growth stock)?

Pretty good argue with myself and lose twice.

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MONEY: The stretch IRA to be killed


Personal Finance
2/08/2012 @ 3:40PM
Congress May Crush Key Tool For IRA Inheritors
Deborah L. Jacobs, Forbes Staff

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Let’s hope there’s enough of a public outcry that this legislation doesn’t pass. If it does, owners of traditional IRAs will have one more reason to convert them to Roth accounts. For more about Roth conversions, see my post, “Smart Moves For Battered IRAs” and two sophisticated strategies described here and here by Forbes Associate Editor Ashlea Ebeling. Meantime, stay tuned.
Hat tip to financial planner Michael Kirsh and CPA Robert Keebler for calling the pending legislation to my attention.

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More bad advice. Pay taxes now rather than later? Guess what tax rates in the future or ROIs will be. I never liked IRAs or 401Ks just because it put you at the mercy of the future politicians and bureaucrats. Argh!

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MONEY: Mitt and his IRA


Financial Planning
The Lessons of Mitt Romney’s IRA
By Dan Kadlec
January 20, 2012

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Mitt Romney’s IRA account is valued at tens of millions of dollars.

Mitt Romney may have made the classic IRA mistake: holding low-tax investments inside a tax-favored account. His IRA strategy isn’t clear, of course. Romney continues to guard his personal finances. But details are trickling out, and even if it turns out that Romney’s traditional IRA is built right for him, the securities he holds in it serve as a valuable reminder that not all investments belong in a tax-favored account.

Romney’s IRA is valued at between $20.7 million and $101.6 million, according to The Wall Street Journal. That’s an extremely wide range that the Journal found in Romney’s latest financial disclosure report, filed in August. His IRA produced income between $1.5 million and $8.5 million last year.

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He has a tax liability of 3½M$ when he turns 70.

This was a “mistake” made twenty years ago.

Interesting to know what was the thinking going on at that time.

When the Congress first created IRAs, I was skeptical of the whole idea on betting what future politicians and bureaucrats were going to do.

I went in on it, but I’m always concerned that the “rules” will change in the future.

Recently, I advised someone to FOREGO participating in their company’s 401k because of the restricted investment choices and the high fees of those choices. I recommended nickels, bullion silver, or other such commodities.

Remember that Social Security was NEVER supposed to be subject to taxation. Then Congress changed the rules.

Who knows what these criminals will do in the future?

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POLITICAL: Irish pensioners targets of revenue enhancement


Irish pensioners fury over new taxes
Previously “untouchable” state services get cuts
ByPADDY CLANCY,Irish Voice Reporter
Published Thursday, January 12, 2012, 7:57 AMUpdated Thursday, January 12, 2012, 7:57 AM

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Savage cuts to a host of previously “untouchable” state services are now being actively considered by the government as a result of Ireland’s dire financial position.

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In the search for money to feed the Gooferment spending habit, the “pensioners” are a good target. They don’t “move” so quick. But they do vote.

Look for this idea to travel over the pond and get adopted here.

The USA Gooferment is in perpetual deficit, with an incalculable debt, the IRA / 401K total is about 14T$. Look for the politicians and bureaucrats to steal that.

You heard it. Steal it in exchange for an “enhanced social security benefit”.


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